Global Governance in Crisis? A Conversation with Richard Haass and the Council of Councils

Tuesday, May 7, 2019
Francis Mascarenhas/Reuters

President, Council on Foreign Relations; @RichardHaass

Sunjoy Joshi

Chairman, Observer Research Foundation (India)

Ferdinando Nelli Feroci

President, Institute of International Affairs (Italy)

Mara Liasson

National Political Correspondent, NPR

Introductory Remarks
Stewart M. Patrick

James H. Binger Senior Fellow in Global Governance and Director of the International Institutions and Global Governance Program, Council on Foreign Relations; @StewartMPatrick

PATRICK: Good morning. Welcome to the Council on Foreign Relations, where today we’re launching the fifth installment of the Council of Councils Report Card on International Cooperation.

For those of you who I haven’t met, I’m Stewart Patrick. I’m a senior fellow here and director of the Program on International Institutions and Global Governance, which has the honor of coordinating this Council of Councils network.

In a few minutes I’m going to turn to the floor over to Mara Liasson of National Public Radio, a familiar and welcome voice in my car on my daily commute and no doubt somebody who has your ear every day as well. Mara’s going to engage three heads of this global think tank network on the state of global cooperation and on prospects for the future. But before the main event, I thought I might just give you a little bit of background of the Council of Councils and this report card in particular.

The Council of Councils was created—was a brainchild of Richard Haass’, created in 2012, and it brings together twenty-eight of the world’s premier research institutes that are interested in public policy as it pertains to international cooperation. Now, its composition is roughly equivalent to the G-20—the members of the G-20 in terms of its national membership, and frankly its purpose is fundamentally the same. It’s basically to help bridge gaps in perspectives between emerging powers and established powers, and to try to see if we can come up with some common rules of the road to deal with global interdependence and manage some of the dilemmas of living in an interconnected world.

Each year since 2015 we’ve asked think tank heads to work on this report card, and we’ve asked these think tank heads to answer three questions. First, how would you grade international cooperation both overall and in specific issue areas over the past year? Second, how should world leaders actually prioritize amongst these top ten global challenges? And third, which of these issue areas offers the most potential for breakthrough in the coming year? This year we also added a fourth question, which was what one reform would do the most to improve global order?

So let’s get to the issues. Needless to say the global agenda is vast, but we believe that ten issue areas stand out in terms of their relative significance, although that relative significance tends to vary in terms of the ranking among them from year to year. And you can see these challenges up on the slide. They range from, for instance, preventing nuclear proliferation, to mitigating and adapting to climate change, to managing cyber governance, to combating transnational terrorism.

So what did we find in this, the fifth installment? Overall, in terms of performance, the world earned a gentleman’s C from think tank leaders in 2018. This is a small uptick from the C-minus that it earned in the previous installment, and it’s actually the first time that the overall grade went up since we began this survey five years ago. On the other hand, it’s not exactly much to write home about or to brag to your parents about. It also needs to be put into some context: this C came after the previous report card had a C-minus, and that was because of Donald—at least in part because Donald Trump and Kim Jong-un were banding threats of nuclear war against each other during the last report card season, and people were still coming to terms with the upheaval that Donald Trump and the Trump revolution in American foreign policy had born for the international system.

Over the past year it would appear that think tank leaders have gotten more positive, or at least perhaps just phlegmatic, about the state of the world. The U.S. may be retrenching, the order may be deteriorating, but the world still muddles along, at times because other countries are willing to pick up the slack as we’ve occasionally seen in issues of cyberspace, for instance, with the data protection regulations of the European Union, for instance, or on trade in a number of ad hoc or preferential trade agreements that others have continued to do despite the United States.

Turning to individual grades, we find that the marks cluster more than we’ve ever seen them. In fact, except for global health, everything is between a C-minus and a C-plus, which is unusual. Normally, we’ve had a far greater range in our grades.

I would say that the biggest disappointment from my perspective has to be in mitigating climate change. Less than four years after the Paris Accord, the world is nowhere near getting—limiting average global temperature rise to two degrees Celsius, which is the fallback position, frankly, for the Paris agreement. And we’ll talk about that a little bit more later.

The world has also earned lackluster marks when it comes to expanding global trade, improving cyber governance, and managing internal conflict.

COC leaders gave a lot of comments when—it wasn’t just the grades that they put in, and you can see this on the online version. They put—they sort of explained why they did their grades. And they attribute this uninspiring performance to a mix of international and domestic factors. Abroad, they point to geopolitical tensions and rising and deepening regional rivalries. At home, they point to populism, protectionism, and nationalism, which are reducing both the appetite for international compromise and the ability to actually deliver it even if a leader is well-intentioned.

So how should we prioritize amongst these challenges? It’s interesting, five years ago when we began this—and so we have a little bit of a time series now—five years ago think tank leaders were preoccupied hugely with combating terrorism and also mitigating violent conflict. Today they define the premier challenge as an ecological one for the first time: cooperating on climate change to ensure that the planet and humanity have a sustainable future. Needless to say, for those of you who have been reading the news, yesterday’s devastating report on the state of global biodiversity just simply underscores the importance of this particular challenge.

The second priority that they identify is managing the global economy, not least in the face of rising inequality. And this is a situation underlined by the remarkable fact that at least according to Oxfam the twenty-six wealthiest individuals in the world now control as much of the world’s wealth as the bottom 3.8 billion dollars—excuse me, billion people. That’s quite a statistic when you let that sink in.

The third main concern that COC leaders identified is that preserving—is preserving nuclear—the nuclear nonproliferation regime, as existing treaties are unraveling or being abrogated and as North Korea continues to test the world’s will.

What about opportunities for breakthrough? For the second straight year, the international experts noted that global health probably provided the most opportunities for breakthrough. But it’s also at the same time the area that they considered of least importance in a crowded field of different international dilemmas.

Think tank leaders also are least optimistic when it comes to making progress on internal violent conflict. Think of the ongoing crisis in Syria, but also not least in Yemen, the world’s most catastrophic humanitarian catastrophe right now.

They’re also highly negative in terms of the prospects for combating climate change, which is the very challenge, of course, as I just said, think tank leaders had said was the most important thing to work on.

The report’s biggest takeaway, arguably, is its implications for the United States. In explaining their grades think tank leaders repeatedly invoked the Trump revolution in U.S. foreign policy, focusing on two big themes.

To begin with, there was a sense that America first often translates into a world adrift. By challenging existing international arrangements and even Western solidarity, the administration has upended the old order but without offering what anybody saw as a positive vision to replace it. It all seemed to be about American power without purpose. That comes across very clearly in many of the think tank statements—think tank leaders’ statements.

The second point though, is that international politics, like nature, abhors a vacuum. The longer the United States remains on the sidelines, the more it creates opportunities for others to take to the field to try to shape the global rules and events to their advantage.

Now, I’m approaching the end of my time, but I want to point out that there is, as I mentioned, a Web-based version of this report that is far more comprehensive than the several pages that you have in hardcopy there, and it has a lot of compelling features. Each issue description—and this is an example right here—carries greater explanation about whether the grade, the prioritization, or the opportunity for breakthrough went up or down over the last year. It also includes a section that we call “By the Numbers” that’s sort of loosely based on—I don’t know if you know the Harper’s magazine, the Harper’s Index, but it has a lot of eye-catching statistics, for instance like the one that I mentioned about the twenty-six wealthiest individuals versus the bottom half of humanity. And it also includes a number of narrative analyses. They try to place these scores, which by themselves wouldn’t tell you that much, in a little bit more of recent historical context. So we’ll look—encourage you to check it out.

We also have an interactive map which displays comments from each of the heads of this global network, and you can filter these by issue area and by country. And this is where you can find answers to that fourth question that I said that we added this time: What one institutional reform to world order would make the biggest difference? The answers, I have to say, to this question were marvelously diverse. They ranged from everything—it was something that people often talk about but nobody has ever managed to do anything about, which is enlarging or expanding the membership of the Security Council, including both its permanent members and its—and its rotating members. Other people said if we could get everybody to implement the Paris Climate Agreement, and particularly getting the United States back onboard, that would be great. Other people had a little bit more rarified suggestions like we need an accord to govern globally the governance of big data. So a lot of different—a lot of different suggestions thrown around, all very interesting.

So we encourage you to look at the report card and to let us know what you think, and maybe we can take some of those suggestions and work it into the next installment as we hope and intend that there will be.

In closing, I did want to acknowledge somebody who has really been the driving force behind this initiative. Is Terry Mullan here? Terry, wave your hand. You have to. Terry does not like to draw attention to himself. (Applause.) Terry is, in effect, the driving force and the day-to-day point person coordinating the entire Council of Councils initiative on a day-to-day basis. And this is a daunting assignment given the many players, as well as time zones, as well as institutional cultures that he deals with. But fortunately he’s a fellow of both extraordinary diligence and grace under pressure, and he also takes special pride in the fact that, as he says, the sun never sets on the COC empire. (Laughter.) So anyway, Terry, it’s been a great privilege to work with you. And you are, frankly, an unsung hero. There are many at CFR, but Terry is or should be at the top of that list.

So now it’s my great pleasure to turn things over to Mara Liasson of National Public Radio. Mara will introduce her fellow panelists and lead them in a discussion of the Council of Councils’ report card. Mara, over to you. Thank you. (Applause.)

LIASSON: Welcome to everybody. Thank you for joining us in today’s Council on Foreign Relations meeting. We’re going to sit down. Yeah, our panelists are going to sit down. We don’t want to waste any time.

The topic of today’s discussion is “Global Governance in Crisis?” And we’re going to have a conversation with Richard Haass, who is the president of the Council on Foreign Relations, and our distinguished panelists who’s Sunjoy Joshi—he’s the chairman of the Observer Research Foundation of India, one of the members of the group that created this report—and Ferdinando Nelli Feroci, who is the president of the Institute of International Affairs from Italy. And this special event is part of the 2019 Council of Councils Annual Conference.

And I, of course, are Mara Liasson. I’m the national political correspondent of NPR. I don’t often get to talk about or cover foreign policy, so this is a great opportunity for me.

And you have the speaker bios, I think. I won’t spend any time reading them, but you can read about our panelists today.

And we’re just going to start. I’m going to ask each of these gentlemen a big question, which is just as Donald Trump is a stress test on democratic institutions at home, the abdication of American leadership has also created a kind of stress test for the international order. And I’d like to ask you, what if anything has moved into the vacuum? Is it too soon to say what the new international order is going to look like? In other words, who’s going to deal with these challenges without U.S. leadership?

HAASS: Happy to start. Good morning. Thanks, Mara. Thank you all for being here.

The idea that the United States gradually exits stage right and others simultaneously enter stage left and it’s done seamlessly is an interesting concept that bears zero relationship with reality. The most likely consequence of a selective U.S. abdication from global leadership and fairly frequent U.S. withdrawal from global multilateral efforts will be to create vacuums, some of which may be filled locally. In the Middle East we’ve seen Iran and, say, Russia play a larger role. The U.S. not entering TPP has created some spaces both for the eleven, but also for China.

But I think the larger answer, Mara, is nobody; that the most likely consequence of the United States doing less is not, again, a seamless transition to a post-American order. It’s much more likely a rocky transition to a post-American disorder, and I think that is what we’re beginning to see in various regional fora and at the—at the global level. Lots of other reasons. I don’t think the United States is the sole driver of this, and we can talk about any of the other number of factors which are helping to bring this about. So even if you had a more traditional United States, it would not be smooth sailing. I think there’s lots of reasons to think that this would be a difficult period of international relations to begin—to begin with. But I think that our policy choices have certainly exacerbated what would have already been a difficult moment.

LIASSON: Fernando, do you agree with that? And is this a kind of permanent situation that’s going to be the reality for a long time, or?

FEROCI: First of all, I’d like to say that I don’t—I don’t have the crystal ball. So, I mean, I’m not a—(inaudible). But basically, I agree with Richard’s assessment. Very difficult to (see ?) how things will evolve.

One thing which is certain and sure, but equally for a country like mine or for a region like mine, which is Europe, is the difficulty to adapt to this new reality. We’re used to a different world. We are facing increasing difficulties in adapting to this new reality. We don’t have a global leader. We have many new actors emerging on the global scene. The rules of the game are being contested, but there are no new rules of the game in place. So I think that this situation is one situation that increases responsibilities of all stakeholders in order for them to be able to redefine the rules of the games.

And again, if there is a region and a continent which is suffering probably more than the others, this is Europe because Europe was used to develop in a context of internationally recognized rule, internationally recognized institutions. And it’s thanks to these reality, to that order—which is disappearing, unfortunately—that we were able to grow up to the point where we have reached so far. So this brings us the—brings to us the question of responsibility, and it is shared responsibility by all of us.

LIASSON: Sunjoy, what does it look like from India?

JOSHI: Well, when the biggest boy in school decides to turn from school—to school prefect to becoming the school bully, there is a problem. And the consequence is that the other kids then start coalescing around very different kinds of arrangements. So we are actually in a position where you are seeing a different kind of power struggle take place, where power arrangements are being realigned. It’s going to be very messy. There are going to be conflicts, and we are seeing many of these conflicts play out with or without the U.S. And that is a kind of rearrangement which we are seeing in the global order. It is not going to coalesce into anything sensible in a very short time unless something else happens that there is a backlash—a backlash to the fact that, OK, you need better multilateral arrangements.

LIASSON: You mean a backlash to chaos.

JOSHI: Backlash to chaos. That backlash is somewhere down the line, but I think eventually it is going to come.

LIASSON: And what about China? I mean, in your part of the world China is dominant. Does China replace some of the chaos, set the new rules?

JOSHI: China is definitely one of the pretenders to the throne. There are many others. But China is, yes.

Let me go back a little bit as to how this all begins. If you start looking at—I really—my favorite line is that Trump is—when all is said and done, is more a symptom than a cause for this kind of disorder. And the real crisis, actually, struck when the entire liberal order—the threat to the liberal order has not come from revisionist states like Russia or from aspiring powers like China; the threat to the liberal order actually came from deep within the liberal democracies themselves, and we must understand that.

And I think the turning point was 2008, when the entire fundamentals of liberal market-led capitalism were challenged and there were—whole economic systems were turned upside down. States, definitely liberal states, liberal societies, decided to become far more interventionist as states. You saw the state coming back with a vengeance. Once that happened, you gave a kind of moral legitimacy to an alternate order which was state-led capitalism, the kind of mercantilism which you see China stand up for.

LIASSON: You’re saying because states intervened to try to prevent the financial crisis from getting out of hand and that caused the backlash?

JOSHI: It was not that they intervened; it was the manner of intervention. As a matter of, you know—

HAASS: Can I disagree with one—I’m sorry. Go ahead.

Let me just—I want to disagree with one idea. And I think—I think—by the way, not with your last point. I think the sense that the financial crisis happened, was a failure of state policy, and the way various governments reacted or didn’t react to it has clearly sown the seeds of a lot of the populism, particularly populism of the left that we’re seeing now. I think the populism of the right has more to do with immigration and issues of identity. Let me disagree with the idea that there’s going to be or could well be down the road the backlash that things will get better only after they get worse, which is a common viewpoint and we heard it articulated here.

Let me suggest an alternative—well, two alternatives. One is that things have already gotten worse and there’s been no backlash. And second of all—it’s my first law of the Middle East—things have to get worse before they get even worse. (Laughter.)

And but take—just look around the world. Climate change is a perfect example. We had the report you mentioned, the biodiversity crisis that we’re having. There’s no response. Even if Paris were realized, we would fall far short of what needs to be done—and Paris is not on a track to being realized. Climate is a perfect example of a slow-motion crisis. By the time the world wakes up to it, all the good options, to the extent they ever existed, will be long gone.

Take migration. One out of every hundred people in the world today is either internally displaced or a refugee. I don’t see the world doing much about it. To the contrary, borders have become more, not less, closed.

Venezuela. OK, three, four million people have been forced to leave. The average person staying behind has lost, what, twenty pounds. So I’m curious; at what point does Venezuela become a crisis? When people lose thirty founds, forty pounds? When ten million people have left the country.

Take Syria.

Take Yemen.

North Korea, it’s increased the amount of fissile material that it had.

So, actually, rather than thinking that you’re going to have a backlash, just the opposite. I could talk about Russian interference in democratic political crises. It’s one of the reasons that my view is the grading here is Harvard-like in its generosity. (Laughter.)

But I actually think things are worse than this suggests, and there’s a level—there’s a surprising lack of response to it. So the sanguine view that with time things will get better, no. Actually, with time things get worse. Situations—it’s what you studied in high school chemistry or physics. Entropy is the natural order of things. Systems do not self-correct, and the global system shows no signs of self-correcting.

LIASSON: So we have all these problems that can only be solved with a global response, like migration and climate change, at a time when the world seems to be less willing, able, or interested in working together globally. So what—is there any of the list of problems this report outlined that you think are, A, the most important to address, but also where reform is the most likely?

HAASS: Most likely?

LIASSON: Most likely. I mean, I’m sure we can all list all the ones that are least likely, but is there any one that’s the most likely, that could happen? I mean, if it’s—if entropy is the natural order of things and only, I guess, leadership can be the alternative to that, right—

HAASS: Sure.

LIASSON: —human beings have—

FEROCI: Can I, before—before answering your question, can I react to Richard’s observation at least on two of the phenomena that he described?

Migration, it’s true, we can live with migration. We’ve been living with migration. Migration has had a very important impact on domestic politics in many, many countries. This country in particular, I think that the election of Trump is partly due to migration. In Europe migration has had a devastating effect on our domestic environment in most countries, particularly mine in particular.

Climate change. Of course, we can live with the fact that we are not implementing the targets of the Paris agreement, but the situation is worsening. Climate change has an impact on migration. Climate change has an impact on natural disaster. Climate change is affecting our society.

So I—and it’s true we can live with—true that the world has not disappeared because we are not implementing progress on climate, trade, and migration, but those phenomena have an impact. So this is what I wanted to underline.

JOSHI: Migration—I would slightly disagree. Migration is not a problem. Migration is also an opportunity, depending on what cycle of growth any region or country is in.

Attitudes towards migration in certain parts of the world today have changed because of a deeper economic crisis which has struck them. When there is a scarcity of jobs, yes, it becomes a question of them and us. People are coming and taking away our jobs. If you can get growth restored—if growth does restore, you will start welcoming migration. Canada is an excellent example where, yes, you have policies to welcome people, you have controlled migration, and migration becomes the impetus for growth. That also has been the story of the United States of America.

LIASSON: We are facing a looming labor shortage at the same time—yeah, Richard?

HAASS: Again, that’s the glass half full. Sure, migration, if it’s selective and it’s high-talent, can be a boon for economies. But what we’re seeing are other pressures—climate-oriented migration, people fleeing terrible governance, fleeing civil wars, fleeing criminal gangs in places like Central America. This is a different kind of migration. And then I think if you look towards the future, demographic bulges in places like Africa and the pressure that could place on places like Europe, I think that’s a qualitatively different migration.

Since I’ve been so negative, though, Mara—(laughter)—though I’m just warming up—(laughter)—where could things get better?


HAASS: I think the least difficult area—I never use the word “easy”—the least difficult could be trade. I’m not saying it will happen, but when you—there’s been a(n) interesting lack of massive protectionism around the world over the last ten years. Some would have predicted it; we’ve not seen it. You’ve had new agreements negotiated, including TPP, including the son of NAFTA. Now, I realize the United States is not part of TPP, and I think the prospects of the USMCA being formally passed over the next year and a half are bleak. But you’ve got the beginnings of the U.S.-Japanese talks. We’ll see what happens with U.S.-China trade. But I think more than any other area we see the momentum and machinery of negotiations. And I think so far at least, even in the absence of new formal agreements, we’ve not seen a crashing through the floor. So I think trade turns out to be one of the more resilient areas of international relations and international order.

LIASSON: Meaning that global trade—net global trade will continue to advance? You don’t see the world splitting into these two different regimes, where there’s an internet in Asia, and different internet rules here, and more companies start moving out of China to produce, I mean, the separation?

HAASS: I think there’s a—not that stark, and I think in internet governance you could have closed versus open.

I think one of the real issues in part the United States and China and friends of the United States and those in China’s orbit more, I think we are probably on the cusp not of divorce, but of some degree of separation. And how we’re going to—5G will be an interesting area and the question of whose pipes you’re going to use given the intelligence and other consequences. And I think the whole supply chain separation, where we’re nervous about Chinese access to parts of our economy, they’re nervous about American sanctions. So I think you’ll see a degree of separation. Not divorce, but a degree of separation on trade. But I still think overall the volume of global trade will go up, and I think you’ll continue to see selectively new agreements.

FEROCI: I tend to agree with this assessment despite what you read in the press today. The threat of imposition of tariffs on China’s exports is certainly a measure that runs against this optimistic perception. But globally, if you look at the actual performance of this administration, the U.S. administration, at the end of the day they have always utilized the instrument of tariff or threat of tariffs to get a result. This was the case with Mexico and Canada. This hopefully—hopefully—will be the case with China. This is all what we hope.

As far as other regions of the world are concerned, the trade liberalization agenda is on track. Europe is continuing to negotiate a free-trade agreement, has concluded recently, as I said, entry into force recently an important agreement with Japan, by the way. So I am rather optimistic on trade despite the ups and downs of this present situation. So we have to live with these ups and downs and limit the negative consequences.

There is another area where I would like to be optimistic, to remain on the optimistic track, and this is nuclear proliferation. There again you have ups and downs. There are probably hopefully signs of a possible agreement, a long-term agreement with North Korea. Not easy—not easy to reach, eh?

The situation is still very uncertain. But there are also other areas where concerns remain quite high. If you look at what happened yesterday when Rouhani from Iran threatened to resume the nuclear program because of the direct consequence of the imposition of sanctions by the U.S. There again so optimism for nuclear proliferation yes, but also with a note of caution because this issue is not that clear.

LIASSON: So we squeezed a little optimism out of them. (Laughter.) I’m assuming the challenge that you’re most pessimistic about is climate change—Is that correct?—and the hardest to deal with? Or what do you think about that?

HAASS: I would say even more difficult is dealing with internal conflict. I think these are—I mean, it’s interesting, we’re living at a period of history where there’s less conflict between states, which was more the twentieth century challenge, and here in the twenty-first century the biggest problem—the Yemens, the Syrias, the Venezuelas, and so forth. And those are situations where—I used the word “messy” before. Talk about messy. And there’s a lot of capacity in a lot of hands. It’s totally disorganized. These things are—they’re fueled in many ways with foreign fighters and weapons and dollars.

So I think, to me, those—I mean, ultimately, climate change, I actually think I’m less pessimistic in the long run about climate change because there technologies could make an enormous difference. And the answer there may be less global agreements like cap and trade or carbon taxes and much more the introduction of technologies that could help either with mitigation, things we can do on adaptation, and conceivably one day we’ll have a conversation about geoengineering.

But even in this country, just take—I think the conversation about climate is beginning to move. And it’s still quite partisan, but I think there’s a greater emphasis on it. And I—so there, particularly in the area of energy use, fuel shifting and so forth, I—my own sense is there’s grounds for some cautious—I don’t know that the word’s “optimism,” but there’s a sense of possibility.

Let’s be more negative on one, I think which is nuclear. I think you’ve got to be worried about the INF Treaty. You’ve got to be worried about the prospects for New START. There could be progress, but I don’t see it, on North Korea.

And I think the biggest area of interest right now is Iran, what happens with Iran vis-à-vis the JCPOA, vis-à-vis the Non-Proliferation Treaty, and then how the Saudis and others respond. If there’s an area of the world that is—could be on the cusp of a nightmarish proliferation challenge, I would think that it’s the—it’s the Middle East: Turkey, Egypt, Saudi Arabia, and others. That, to me, is the nightmare area potentially—not necessarily, but potentially—where diplomacy, you would have to hope, focuses for the next decade or two.

LIASSON: Sunjoy, do you agree?


JOSHI: Oh, I’m sorry.

FEROCI: One comment on internal conflict. I am amazed always when we speak of this that never Libya is quoted.

HAASS: It should be.

FEROCI: I mean, and we had two-day conference and never this case of Libya was mentioned. And it’s maybe because it’s very close to the borders of my country we’re very sensitive to what’s happening in Libya. This is a typical case of a not—unfortunately, not a frozen conflict; a very hot conflict. Two factions are fighting each other. There is no clear prospect of solution of the crisis. And it’s political instability in a region which is very, very delicate for many reasons, not least because it can be a place where most people that left the ISIS territory could move. That could become a sanctuary for terrorists. Not only a place where migrants come towards Europe—this is something that could be managed—but could be a sanctuary for terrorists that would come from all over that region. So I think that we should look more carefully at Libya, try to see if it’s possible to find out a way where the international community would find the possibility to intervene. Because we know that there are stakeholders—regional stakeholders and global stakeholders—that unfortunately have different agendas, and this makes the solution of the case of Libya very difficult and very complicated.

Sorry for the interruption.

HAASS: No, it’s a good point.

LIASSON: That’s OK. I wanted to ask Sunjoy about nationalism, which we haven’t talked about yet. You wrote in your comments that you think is nationalism is replacing globalism as the defining political mood within many societies; in other words, not just Donald Trump, but that America has become that. I question that. I mean, if he had won the popular vote I would agree with you. But how dangerous do you think nationalism is to democracy and global cooperation?

JOSHI: Well, drowning men clutch at straws. Submerging democracies clutch at strawmen, and that is what we are seeing the world over. You are seeing a certain kind of resurgence of leadership. Strongmen are back, whether it’s Erdoğan in Turkey, whether it is Philippines, whether, you know, you look at America, you look at Putin, wherever it is. You’re seeing a resurgence of strongmen.

The point is they do not have the answers to the problems they hope to resolve. So over time, and in democracies especially, there is going to be—again, my favorite word, “backlash,” which Richard does not like—there is going to be a backlash. You are going to have people who are going to come out and vote these people out. You saw it happen in Turkey in the mayoral elections. Of course, he’s fighting back. These strongmen will fight back. They do not want to give up power. But ultimately, you cannot, you know, go against the will of the people. The will of people does prevail. So I am, frankly, positive. I’m, frankly, positive over the long run.

And another area where I’m actually positive, which was discussed and I need to say this bit, is actually climate.

HAASS: Is what?

JOSHI: And not because of states.

LIASSON: Positive about climate.

FEROCI: Climate.

LIASSON: Yes. So is Richard, yeah.

JOSHI: Climate. Addressing climate change. And not because of states, and not because of what governments will do. You are seeing certain other kinds of movements take hold of people.

LIASSON: Like a children’s crusade.

JOSHI: Greta Thunberg.


JOSHI: What you saw, you know, the—what you saw. The extension—(inaudible)—taking place. You had the report of the U.N. saying—came later, but the Extinction Rebellion or really the hashtags of the Extinction Rebellion are taking over the Millennial generation. I don’t see any democracy being able to actually shut their eyes to this.

There’s something else happening. If you start looking at profiles of children, the best children choosing their studies in universities, very few children actually opt to go into the fossil fuel industry. The best brains today opt to go somewhere else.

So these are changes which are going to take time. And gradually over time you are seeing a buildup where hopefully—at the moment climate finance does not exist. Finance is not flowing into the areas where it should be flowing. But you are seeing a certain kind of resolve taking shape, you know, within pension funds, within certain other, you know, venture capital funds. It is not something which is going to happen overnight. You know, these changes take time.

Whether you limit it to 1.5 (degrees), frankly, I don’t think the Paris agreement, Richard, Paris Accord, will not get us where it hopes to get us because the Paris Accord actually kicked the can down the road. It did not do what it was meant to do. So the Paris Accord is bound to fail. But there are other things which over time will succeed. Global temperatures may—if estimates are correct may perhaps not be limited to 1.5 (degrees), maybe limited to two (degrees), maybe limited to three (degrees). But—

LIASSON: What are the other things that will reverse this or stop it from increasing?

JOSHI: This is—fundamentally, these are going to be non-state-led initiatives. I do not have much faith in governments and states being able to address the issue of climate change.

LIASSON: But if governments can’t address it, a children’s crusade can’t address it either. They can—they can advocate for it. But what is the reform that you see most likely? Yeah.

JOSHI: The ultimate reform which needs to happen is reform in capital flows. The people who need to have a conversation on climate are not even in the room in Paris. Those are your bankers. Those are your hedge funds. You know, you are—you are sitting on trillions of dollars of money which is looking for avenues for investment. That is not going into the kinds of projects—$89 trillion is required by 2050 to address the issue of climate change. So this—the fund flows has to match our intentions, and that is a larger change which needs to happen. It will not happen by just nudging from state governments.

LIASSON: So capitalism will solve climate change?

HAASS: It won’t solve it. The question is, again, I think the biggest area for progress is probably dealing with, you know, new fuels, a new generation of nuclear reactors, better batteries, solar, wind, storage capacity. We’ve seen the amazing revolution in this country through fracking—natural gas, which has allowed all sorts of fuel shifting. We’ll see what happens with carbon capture down the road. So I think there is an area where technology may—and, you know, added investment could make a difference.

I think, though, there’s not a—I don’t think you—we would ban the word “solution” there. A lot is baked into the cake, and we’re going to be dealing with adaptation and the consequences of climate change that’s already occurred or that’s underway, so to speak, for some time to come.

But I just think more broadly, Mara, I think we’re entering a period of history where you’ve got these really large challenges. You’ve got a lack of consensus or a lack of will, or both, about acting on them. You’ve got a revival of great-power rivalry. So it’s going to be a difficult time to tackle the sorts of things that are in this report card. You know, we can argue whether the grade should be C, D, what have you. But I think it’s going to be difficult for a lot of structural reasons, including but not limited to a U.S. reluctance to perform its traditional role. I think it’s going to be a really difficult time for the world.

LIASSON: We’re about to open it up to questions. I just have one last quick thing, since we’re starting the presidential election cycle in the United States. Usually, foreign policy doesn’t move the needle at all. Do you think that’ll be true this time, too?

HAASS: Well, so far at least we’ve seen very little discussion on the Democratic side about foreign policy. It’s not the driving impetus for a lot of the candidacies.

LIASSON: Yeah. Climate change is a big issue, but yeah. Yeah.

HAASS: Climate change is a big issue, and I think that’s been the area of the richest conversation, a lot of ideas out there a little bit. So that’s that.

One of the candidates, Elizabeth Warren, has published in Foreign Affairs. And quite honestly, a lot of her foreign policy was not fundamentally different than the incumbent’s: real hostility to trade, hostility to American forces in Syria and Afghanistan, and so forth. So I think, you know, Vice President Biden is by far the candidate on the Democratic side with the most—what’s the word—developed views on foreign policy. But historically—and correct me if I’m wrong here—foreign policy’s not been central to American campaigns absent of times when foreign policy was at the crisis level.

LIASSON: Right. If we’re not in a war, there—yes, people don’t care.

HAASS: A hundred percent. So I think that we’ve dialed down enough of our international involvements. And so I—unless a war starts or there’s a major crisis that’s presented to us one way or another, I would think foreign policy—at times it’ll look like we have a campaign to elect the next prime minister more than the next president, unless foreign policy somehow finds a way of intervening on the agenda. I think you’re a hundred percent right.

FEROCI: One last comment before you give the floor to the audience. There is a subject which has not been explored directly by this report, and there’s a subject which is very dear to me personally and to most of the countries in Europe. And it’s the impact of digital agenda and digitalization on the way our democracies are functioning. So I would like to close my remarks with a suggestion for the next edition of the report card. If you can add this particular chapter into the card I think it would be very useful, at least to have an idea of how much is of interest this problem in different regions of the world.

This is something which is very sensitive in my region, which is Europe. Maybe somewhere else it is not that sensitive. I think it’s very important. And it’s linked to the other phenomena which you mentioned before, which is the rise of nationalism. Thank you.

LIASSON: OK. Now we’re going to invite our members to join the conversation. There are a couple rules. Everything is on the record, so keep that in mind. Wait for the microphone to be brought to you. And when you ask a question please stand up, state your name and your affiliation, and please only one question at a time.


Q: Thank you. Steve Charnovitz from George Washington University Law School.

This is a very impressive report, and I think the Council of Councils has a platform for helping to improve some of these problems. So I’m wondering, what’s the strategy of the Council of Councils for promoting its ideas to the G-20, to heads of state, to international organizations, to the U.N., to the public? How are—I mean, this is a great report. You’ve got some good insights, good anecdotes, and I think Haass’ axiom that things have to get worse before they get even worse is something that people can understand. And so I’m just wondering, what’s the strategy for taking this further?

HAASS: I guess I’m the home team. First of all, I’ve never had an axiom named after me, so that’s very exciting. (Laughter.) I’m going to work on that. Thank you, Steve.

And, Stewart, you may want to jump in here.

We do not try to take collective positions. Those of us who served in the U.S. government still have the scars of G-7, G-8, G-20 type meetings where we negotiate communiques. One of the decisions we made was not to turn this undertaking into a communique-drafting exercise, which we thought would be a bad use of our calories. What we’re hoping is the report gets attention. And what we’re hoping is that the conversations we’ve had over the last couple days and we’ll have for the rest of today, where we do talk in some cases about prescriptions, that people then go home to our two dozen plus countries and we plug these ideas whether it’s into private communications with government or in the public conversation in our respective countries, that that’s essentially the conveyor belt. Rather than speaking as this corpus, the Council of Councils, each of the component organizations—the two dozen plus organizations—essentially has ways of, again, introducing the analyses and the prescriptions into their home conversations. People will be publishing all sorts of things that spin off of these conversations. It’s more—it’s more that way.


Q: Hi. Good morning. Jenna Ben-Yehuda, Truman National Security Project.

If Trump doesn’t win reelection, what gets restored and what doesn’t? Thanks.

LIASSON: Good question.

HAASS: As an American, a lot depends upon if he—two things. One is if he were not to win, given the range of candidates on the other side, I don’t think you can generalize. Quite honestly, it’s very different if it’s President Joe Biden as opposed to President Bernie Sanders. It’s a rather different American foreign policy approach to trade, approach to military intervention, and the like. So one thing is if Donald Trump doesn’t win, what replaces him?

And as we were just saying, many of the Democratic candidates are fairly unpronounced. I don’t think necessarily we have a great idea what would be the foreign policy of maybe fifteen or so of the twenty-plus. Probably since we’ve begun this morning there’s one or two more candidates. (Laughter.)

The other is—and I think it’s a really interesting question for people to assess—I mean, my colleagues here may have some thoughts on this; I hope—I expect they do—which is one should not assume that when Donald Trump exits 1600 Pennsylvania Avenue, whether it’s in two years or six years, that all elements of Trumpism exit with him. I think Sunjoy said that he’s to some extent a symptom, not a cause. Elements of, quote/unquote, “Trumpism” were there before him, whether it was questions about trade, questions about America’s world role, hostility to certain types of military interventions. We saw that during the Obama years or even before.

So I think one of the interesting questions is, again, what elements of that are likely to endure. But my hunch is there’s not a 180-degree change in American foreign policy, though again, depending upon who were to win, I do think there are potentially significant changes.

LIASSON: Just—oh, go ahead. Yeah.

FEROCI: Can I—can I add one observation? Of course, I am not in a position to say what the next president will change with respect to the—to the present policies by Trump. But I could say what the allies would allow the next president change in the attitude of the American—of the next American administration. I’ll give just a few examples.

Come back into UNESCO. Sign the Paris agreement. Sign the deal with Iran, not go for confrontation with Iran. Develop a peace process for the Middle East. So there are plenty of things that we would like to see implemented by the next American administration. And restart a cooperative dialogue with the allies.

LIASSON: You know, just one comment about that. The only thing that all the Democratic candidates agree on is getting back into Paris. I think that’s the only foreign policy issue where there is unanimity. Otherwise, it’s like Richard says; it’s a real mixed bag.

HAASS: But even getting back into Paris, since it’s acknowledged that even if Paris were implemented it wouldn’t do the trick, that seems to me—

LIASSON: But it would be symbolic of America returning to some kind of leadership.

HAASS: Absolutely. Yeah.

JOSHI: But the U.S. is actually not out of Paris yet, even under the Paris Accord. It does not get out until 2020.

LIASSON: Right. That’s substance. But the—but the idea that the American president has—

FEROCI: More symbolism.

LIASSON: —said they don’t want that, has dissed NATO, the EU, alliances in general, the idea of multilateralism generally as meaningful.


Q: Thank you. Peter Ackerman, Rockport Capital.

One of the things I was sort of surprised in the discussion was very little—no discussion about corruption. If these numbers of 5 percent of the world economy are going to corrupt behavior, the consequence of that is just incredibly profound. First of all, that kind of money has to be hid once it’s taken, so it’s not available for reinvestment. If you take a trillion of that 2 ½ trillion a year and just reinvest it in climate change technologies, you would have a very different climate problem.

Secondly is that this money basically fuels some of the worst governance—people who are behaving the worst in terms of governance, and also therefore fueling internal conflict, and also opposition to the world order you would like to see. So I would hope we would think a little bit more about the consequences of that.

HAASS: I think that’s a good point, Mr. Ackerman. (Laughter.)

JOSHI: We all agree.


Q: See, I tried. (Laughter.)


JOSHI: Difficult to disagree, yeah.

Q: My name is Carlos Leal. I’m from the Fundação Getulio Vargas in Brazil. I have two small remarks.

One is a technical remark. You are taking—on the COC report you are taking averages. When I answer a question, I may give a C which is completely different from a C of someone else. Instead of using parametric statistics, trying to take averages, we should do ranking—ranking and see if things are changing from year to year. And to me they are changing when you read the answers.

But the second remark is more important, is that this part of this discussion is a very old discussion, is Malthus against innovation. Are we going to be saved by innovation? Are natural resources enough? Climate is a natural resource. The discussion maybe is not for us a solution, but what will be the timing and the cost. And what is the cooperation and competition that is behind all those issues?

On the climate issues, of course you have competitive questions there, competition between nations. So it’s not as easy. And that entails competition not only from an economic point of view, but also military. And you see different positions. So I think that the agreement will be very, very difficult. So I would like to know what you think about this.

HAASS: Well, I agree that agreement on climate’s going to be difficult, but not so much for the reasons you suggest. I think that historically countries have seen taking significant measures in the realm of climate as somehow juxtaposed against economic performance. I think there’s reasons to doubt that increasingly. But that has historically been the argument, that if you wanted to offer electricity to hundreds of millions of people—which is, say, India’s challenge still—you’ve got demographic pressures in certain areas, and people enter the middle class and want certain benefits that they associate with the middle class, that it’s going to be very hard to do this in a way that is consistent with climate goals.

But I don’t see for the most part geopolitical competition. There’s not a Chinese approach to climate change that somehow disadvantages the United States, for the most part. And there’s more than enough room for competitive entry into various green markets. I think it’s more—it’s more the result of what—the domestic debates within various countries, and you add it all up and you get global performance on climate change. But this is not something where the—for example, the reemergence of great-power rivalry is not an explanation for the lack of global progress on climate change.

LIASSON: Sunjoy?

JOSHI: Thanks, Carlos, for bringing that up. In my view, as far as climate goals and addressing climate change, the whole issue is concerned, see, there are a few ideas which need to be discussed which are not on the table.

First of all, climate action needs to be technology-agnostic. You have—you have certain goals of carbon reduction, and once you—if you can attain those goals, then it does not matter what technologies you use. The trouble is many times state intervene to block out certain technologies for reasons they know best. So whether it is different types of solar, whether it is the nuclear option, whether it is carbon sequestration goal, whether it is, you know, converging fuel substitution from coal to gas, these are all substitutions which actually affect how much carbon you’re putting into the atmosphere. You know, that is the—that is the first thing. So that is—having a climate-agnostic—a technology-agnostic climate policy is one of the primary things which we need to move into.

And then, yes, you have solutions today. For example, if you look at India’s performance, in the last five years India has not added one megawatt of coal-based power. All capacity additions have come in green power and solar power. And what was 13 percent capacity in 2014 becomes 21 percent, and if you add hydro it becomes 30 percent of the total capacity. Now, that is a transformation. So as far as the Paris Accord goes, I have lots of other things to say about it, but the contributions which India has committed to will be far exceeded; they will not just be met. You will have 175 gigawatts of renewable power far earlier than 2022.

So there are things happening. Solar tariffs have become competitive. The problem is grids even in developed countries are unable to take in intermittent power. You need massive investments into the grid before you can start absorbing them. That’s a problem Germany faces. That’s a problem U.K. faces. That’s a problem Spain faces. So you’re seeing more—in many countries like Germany, in many countries like Spain you’re seeing a situation where you’re adding more renewable power, but at the same time you are emitting more carbon because your coal (conduction ?) has not gone down. Your tariffs are going negative. So there are many other bits to this, you know, many other parts to this moving machine which need to be tinkered with when we start addressing these issues.


Q: Ricki Tigert Helfer, the Ice Glen Group.

I’m fascinated that we’ve had this discussion about how many of the conflicts are more internal and are very disruptive internally in the country, and we haven’t used the word “Brexit.” So I think it would be very useful, particularly with our Italian colleague, if he would discuss what impact the fact that one of the world’s oldest democracies and the impasse in Great Britain over how to deal with this issue is having on the EU and more generally on the view of the effectiveness of democracy.

FEROCI: Oh, many, many lessons to be learned from the Brexit case. I don’t know where to start from, and I have to be short.

The first lesson, in my view, is that you should avoid referendums for such a complex—(laughter)—for such a complex issue like exiting the EU. They are only now realizing how difficult it is to leave the EU after having been in for more than thirty years. But this is one side of the coin.

Now, as far as Europe is concerned, I think there’s one lesson to be learned is that never as in the case of the Brexit negotiations the EU has been so united. This is something which is striking. We almost divide on everything; on Brexit, we were able to stick together, remain united until the very end—I mean, at least until today. I don’t know what’s happen tomorrow.

Second lesson is that Brexit has been—has had a devastating effect on the internal domestic political landscape in the U.K. Traditional parties are almost disappearing. New parties are appearing. And as a result, nobody knows what will happen. So at this very juncture we don’t know exactly whether we will have a Brexit with a deal, whether we will have a no-deal Brexit, whether we will have a new referendum. What sort of new reality will emerge from this situation?

One thing is—sure is that it’s in the interest of both us, the twenty-seven that we remain, and the Brits is to define a new set of rules for the relations after the Brexit based on the principle that we need—absolutely need the best cooperative framework for relations between the U.K. and the EU after Brexit. We have to go through three, four years of shaky relations, but at the end of the day the prospects will be that of redefined relations based on the principle of a friend, strong, intense cooperation. We need the U.K. as much as the U.K. needs Europe.

HAASS: Can I say one thing on that? I think one of the ironic consequences of Brexit, it’s made likely that any other—less likely that any other country departs the EU. It’s Mr. Cameron’s unexpected gift to Europe—(laughter)—is that he’s actually made everybody else think twice. And I think as a result the U.K., much more than the EU, will be the big loser. Indeed, if Brexit goes ahead I don’t believe there will be a U.K. as it’s currently constituted in a decade.

LIASSON: Sir. Yeah.

Q: Hi. My name is Ali Wyne. I am a policy analyst at the RAND Corporation.

You talked about America’s selective abdication from certain positions of leadership, noted that geopolitics abhors a vacuum. So, given those realities, do you see China as offering some coherent alternative of global governance or of a sort of order? Or do you just see China filling in the vacuum without necessarily offering a coherent vision of its own?

HAASS: Want to start?

FEROCI: Please.

HAASS: Well, actually, Sunjoy, why don’t you start? Because you—India.

JOSHI: Yeah. I don’t think China is offering any alternatives as yet. China has been extremely hesitant. And even, you know, taking on a role beyond itself, China has just started to step out. The major thing which—the biggest initiative which it created was in 2013, the BRI, which was, yes, a kind of economic—a strategic project disguised as an economic project. And that has been China’s single major intervention, which actually has caught the imagination of many countries. In Europe you can see Italy just signed on, the first G-7 country, on to the BRI. It has had an impact in West Asia. It has had an impact in Africa.

The narrative is very simple. China comes in with a proposition saying we are going to dislocate eight-five million jobs as we move up the value chain; who is going to get these jobs? Now, that is a proposition which most countries find extremely difficult to resist. The problem is that BRI does not really solve the core problem, which is infrastructure needs in developing economies. The needs are far greater. It only addresses part of the problem.

And the infrastructure needs of these developing economies cannot be solved by the kind of interventions which China is proposing to do, because if you just look at the numbers these countries need about $25 trillion by 2030 in just infrastructure development. How much is the BRI promising? It is far more than America is promising. It is far more than Australia is promising, several multiples of that. But it still remains a paltry $1 trillion.

So there are lots of other things. There are alternatives which will have to come in to create this. And I keep on saying that eventually you will have to have proper capital flows into these economies. You have to rework.

If you look at the past few years, capital flows have been virtually nonexistent. Most project finance—80 percent of project finance has been in-country. Only 20 percent has come in through global capital flows. Now, that equation needs to change.

So that is the alternative proposition which the rest of the world needs to work on. And China also is going to need that.

LIASSON: What about China as a model for an alternative type of governance to the U.S. Is that appealing to people?

JOSHI: In certain countries, yes. In certain countries which prefer a surveillance state, in certain countries which prefer that the state should definitely be having more control over citizens’ lives, yes, China has a certain attraction.

So if you—the next big war—we keep on saying that the trade war is going to be resolved. I am not so optimistic because the trade war will—the trade war is actually a proxy for a far deeper conflict, which is a technology conflict. And the technology conflict is going to be fought through trade. It is going to be fought through tariffs. It is going to be fought through rules and non-tariff barriers. And that is going to exacerbate over time. So this—in this particular sector, as far as trade is concerned, there is more trouble ahead.

HAASS: Can I just make a slightly different point? And I don’t disagree with that.

China’s Belt and Road Initiative is largely a manifestation of China continuing to look to its foreign policy to promote its domestic goals: strengthening of the party, strengthening of the government, and so forth. This is not the Chinese equivalent of Dean Acheson’s Present at the Creation. This is not the Chinese promotion of an alternative to a liberal world order. So I think there’s something very different. So, again, we have the United States moving away from, in a sense, its own creation of seventy, seventy-five years, but China’s not putting forth an alternative model so much as it’s turning to its foreign policy as a way of promoting its domestic goals.


Q: Good morning. It’s Paula Stern, The Stern Group.

Just putting together the presentation, Peter’s comments, other comments about Belt and Road, I’d like you to address the role of finance, and the role, increasingly we see in the United States, of the Treasury Department and other arms of the U.S. government basically being able to trace and in some cases sanction and—financial flows, particularly with regard to Iran for example. Is there a role to channel internationally some of these both hidden sums, which are hot money, through better knowledge and governance by the Treasurys of the U.S. and the rest of the leadership to address some of these major problems which you have addressed here? Technology I understand is going on its own regulatory track, but finance I don’t think we have really kind of grasped what its potential role might be in a better governance system. So I’m just wondering if y’all—you’ve clearly thought about it and I’d love to hear your comments, but the rest of the panel.

JOSHI: 2008 was an extremely instructive event in the world of finance, and it actually has shaken the world of finance in ways which are very, very deep-seated. It has exacerbated problems So instead of being closer to solving problems there, I think we are in a much worse situation.

It has broadened regulation in many ways, kinds of regulations, especially norms on sector caps, how much sector lending you can do in certain areas as part of the regulatory procedures, which actually restrain/constrain the flow of legitimate finance. I’m not even talking about the other finance, the question you raise. I mean, even talking about legitimate finance, the flow of legitimate finance into certain sectoral projects—infrastructure projects—which are the key to the problems which we are discussing.

So that is one area of governance which needs to be thought out very deeply. I think you need to rethink Basel norms in many ways, which will—we introduced Basel III norms after the crisis.

It is not just developing countries which are facing this problem. You are going to have a problem in replacing infrastructure in the brownfield projects in the developed world. Your bridges need replacement. Your roads need replacement. Your railway tracks need replacement. All the finance which really flows in is today in certain virtual tech companies. There’s a lot of finance flowing there. But if you start looking at the core bread-and-butter issues of the whole hard infrastructure, there’s very little money flowing there.

So I do not have an answer to that problem. I only have another problem, that—how do we get out of the mess we entered into in 2008?

FEROCI: Yes, I agree. As a consequence of the great crisis of 2008 in the following years most countries were obliged to introduce restrictive budgetary policies. And when it comes to public finances, there is very little room for maneuver to increase official development assistance, at least in the Western countries, particularly Europe. So this is something I’m very well familiar with.

So I wouldn’t look at public finances as a source for more money for the South. But maybe if we could look at what the private finance could do to steer development, particularly through investment. So the idea is to improve in the receiving countries the business climate in order to make investment and—incentive for investment in the South of the world.

HAASS: I would just say two things, because most of the post-2008 Basel reforms were dealing with questions of institutional and banking resilience, and so what needs to be reserve requirements, all that kind of stuff. Two things in this area that I would think are worthy of some work.

One is the globalization of the Foreign Corrupt Practices Act. How do we basically take FCPA principles—we have an interest in doing this because, one, we think corruption’s bad; and, two, we want to operate on a level playing field. So how do we institutionalize/universalize FCPA? Which is one thing.

The other is—and it’s an area that I worry about—is the what’s the legitimate use of national security exemptions for investment flows, and to what extent does this become at some point investment protectionism. And I think we’re heading towards a major set of issues there because, again, the criteria—and this has become a kind of pretty large but you can drive a truck through it many—OK, there’s legitimate concerns, but at times it’s being used for unintended purposes. And I think that’s another—an area some useful work could be done.


Q: Hi. Jennifer Hillman from Georgetown Law.

I was really struck by the eye-popping or perhaps ear-popping statistic about the twenty-six wealthiest people have the equivalent wealth of the bottom billion people. I’m just curious, do you see much optimism of any efforts to actually address the global sort of growing level of income inequality? And if so, who does that? I mean, is that a government responsibility? Is that elsewhere? What do you see on the horizon in terms of addressing that issue?


HAASS: Go ahead.

FEROCI: No, I’m glad you raised that question, and I am surprised that nobody did so far because this is one of the major problem we have to face. And it’s a problem both among states and within states. And it tells you a lot if you look at the situation of many countries how much these growing inequalities in terms of distribution of income have had an impact on the domestic situation in many, many countries.

So I think this is a problem which needs to be tackled, needs to be solved. It’s a bit difficult. I agree with Richard’s “solution” is a word we should avoid. But certainly, it must be looked at more seriously than has been the case so far. And I think basically it’s—fundamentally, it’s the responsibility of the public sector, of the politicians, governments, those who have responsibilities in terms of policies that improve the distribution of income and the distribution of wealth.

HAASS: Just let me give two slightly different reactions as I’ll continue my pattern here.

One is I think the inequality between countries, to a large extent that’s the issue—that’s the challenge for the countries to increase their growth rates and their productivity. And the fact that the United States is growing at what it is I don’t think per se holds others back from doing better. It’s their own decisions.

I think the question of inequality within states, which has become a much more poignant issue whether it’s people wearing yellow vests in Paris or some of the debate in the Democratic Party here—I think that is something to be taken very seriously. But to me the answer is not redistribution; the answer is to make upward mobility a reality. And the problem in the United States for most of the last twenty-odd years is not that, I would say, that the rich got richer; it’s that those who are not wealthy did not get wealthier. And I would think the challenge—I think if we end up having a debate in this country that’s based upon redistribution—wealth taxes, much higher income taxes—it will be politically—divisive doesn’t begin to capture it. We’re already seeing a very unhealthy competition between and among states over local tax rates.

I would think the answer is how do we make opportunity—if you’ll pardon the cliché, the American Dream—real again. And that gets you into conversations about everything from education policy—why can’t we make better K through 12 education—gets you into high-skilled immigration policy, and so forth. That, to me, is the—is a creative conversation. But I think if it simply becomes a conversation about re-dividing the pie then I think our politics will grow even more bitterly divisive than they already are.

JOSHI: Can I—can I muddy the water there a bit? (Laughter.) OK.

A direct response—when you talk about nationalism, nationalism is a direct response to rising inequality. And I know you have seen that in many countries. That is the first thing.

Second is things—this is one area where things will probably get actually worse before they get better because you’re also standing on the cusp of, you know, transformational technological revolutions. You’re getting into a fourth industrial revolution. And there’s a huge challenge of re-skilling. It’s not that jobs are going to disappear. The nature of jobs completely changes, transforms itself. You know, the kind of white-collar workers are also under great threat. So there is going to be a redistribution of the kind of employment about—which are going to exist.

So, yes, in the—in the medium run we are going to need definitely more state intervention. You have at least heard people start talking about universal basic income schemes, you know, in many countries. They are talking about universal basic incomes because that is a challenge which the forthcoming technological revolution is going to place upon a lot of countries in the world.

LIASSON: I think—we have one more or we’re out? We’re out of time. I’m sorry. We could keep on going—

HAASS: Can I just say one thing on that last thing?


HAASS: Just I’ll make an advertisement for the Council. Sometime in the—in the coming days or weeks we’re going to show the new HBO Vice film called The Future of Work. And what it does is it was based upon our—the Council’s taskforce report on this subject, and it deals with the challenges of re-skilling, private-sector challenges, government challenges. And it discusses some of the policy alternatives, including the pros and cons of things like UBI. So that is—that’s coming to a Council on Foreign Relations near you. And it’s already on—if you go on HBO, you can watch it on HBO On Demand.

JOSHI: Sign me on. (Laughs.)

LIASSON: That’s great. Well, thank you so much. Thank you to our speakers and to our members. We had a great discussion. (Applause.) Come back again.


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